tv Closing Bell CNBC June 14, 2012 3:00pm-4:00pm EDT
chicken mcnugget. the nasdaq just went negative. thanks for watching "street signs," everybody. the "closing bell" with mandy drury is coming up next. >> and of course bill griffeth. >> that's fine, i know how it is with coanchors. >> hello and good afternoon, i'm standing in for maria bartiromo. >> and i'm bill griffeth. we were mostly higher but the nasdaq just went negative.
as we have seen lately things change quickly in this final hour of trading. stay tuned we will need to fasten our seat belts. the blue chips are holding on to gains but we're well off the highs. more weak economic data like the rise in jobless claims we heard about this morning and the increase in the chance of the fed doing more to goose the economy would be positive for stocks, so we had a pretty good rally on the open this morning. that is a follow through on the greek stock market which was very strong this morning. the european stocks followed suit, and we had a good rally all day. the dow is up 27 points. there is the nasdaq turning negative now for the first time since the open. the s&p at this hour still positive, just a gain of 6.5
points. >> let's get to the closing bell exchange. we have a huge panel lined up. including rick santelli and steve leaseman. if this is a hope for a move by the fed, will might be extra wiggle room to do that, are we rallying for the right reasons? >> absolutely not, rallying to artificially stimulate the economy is not good. we're about to see expected earnings when we see earnings announcements in july come down. anybody right now should be selling into any kind of strength in the market because things will get a lot worse before they get better. >> it plays into the feds hands here if they want to had more liquidity to the markets here or if they want to raise
expectations. >> i think the way i put it is it plays into the risk managers hands of the fed. whatever the state of the economy, and i know there is a robust debate by the fed about that, but there is a risk to the economy that things will end up weaker. as you said, bill, the inflation number suggest that there is little inflation, at least immediately, will get out of control and cause it to rethink that policy. the bigger debate now, bi, is what that action will be. i think the best way to think about this is probably extend the operation twist. i don't believe the numbers or the appetite on the committee is changing in size. >> what do you think the bond market is most focused on? is it what the fed will do or
not do? >> they must want to put ben bernanke out of a job. without his help, without extending sop of the help programs, we have record low yields today for 30s, we had it yesterday for 10s. the injury owe currency may have it's worse close, and as our guests just pointed out -- >> rick, i guarantee what you just said will be said around the table next week, rick. they will make that point on the fed. there will be a bunch of people that say that and it will stay in the fed's hand. >> the point of operation twist is to keep loan rates low and as wik is suggesting the market is doing it for them, right? >> they're taking credit for inflating the economy, that
would raise interest rates, and for keeping interest rates low. >> i have a question for bob, what pushed the nasdaq into the red? >> apple's weakness. they have not participated in any part of the rally today. let me just make a quick comment. we're moving on qe 3 talk, and hopes of a positive pro-bailout turn out, but another factor here with the markets is there was a huge derisking in april and may. they sold energy material stocks. so the portfolio in a way is easier to something. we stabilized in june. there has been such heavy selling going on in april and may. i just want to point that out. >> it's also worth pointing out, bob, that the market has been rallying in part on hopes out of
europe. >> what kind of hopes? >> that grease will not exist the eurozone? >> i think -- i'm picking up the conversation, but not necessarily an agreement. >> it feels to me three is not a lot of conviction either way. really it's very difficult to work out what is going to happen. >> and there are so many possibilities. we're not just talking about possibilities in one country, we're talking about many different countries having these problems. so what do you do? we were talking about the high-tech stocks. you have to watch those, when they start to come down quite a bit, and you said apple is not participating, they're very economically sensitive. when you start seeing those sell off that's a clear warning sign
the market is going south. we're positioning our clienting, buying a lot of stocks and they're sensitive to oil prices. you're picking up 8 or 9% income on those. bayou tillties and limited partnerships, and you might see it go higher. the question is will the earnings come in. >> what happens next week if the fed does nothing? >> in my opinion the ten year might receive off just a bit, but i don't see a lot in the fixed income mark, i think you will see more. >> show the dow chart very quickly. look at that. i looked away and 30 seconds later we have a 50 point rally.
>> the s&p is up by 19%. >> bob, we'll let you know what happened there. stocks are rallying, thank you for joining us here, but the stobs were higher in greece as we mentioned this weekend ahead of the elections. we're back in athens with the latest, and i know that polls are not allowed, but there is a rumor that the pro-bailout candidate is winning. >> yes, it is. let me give you one headline saying that central banks are preparing coordinated action to providely quiddity if needed after the elections. coordinations central banktivity in the past helped lead to market rallies because the question is, where will the
greek people go this weekend. one outcome is they vote for the probailout party that said they want to stay in the injury owe by staying with the us a tearly measures. that could lead to rioting in the street. they could vote for the anti-bailout party that would cause financial markets to plummet, but lead to peace in the streets. most of the polls have been neck and neck. we have seen some numbers indicating that the momentum is shifting to the probailout party. we want to show you video -- >> michelle, before you -- >> give us that headline again, we are seeing a very strong rally in the u.s. market right now in the last few minutes, and i suspect it's based on those headlines you were discussing
about a coordinated effort among central banks. >> central banks are prepared for coordinated action to provide liquidity if needed after the election. they're worried about seizing up inly gizty as we saw in europe. if people believe they will leave the injury owe, you would see severe runs on bank. we have see capital flight on grease. we have anecdotal -- >> show us the euro chart, guys, it will track along with our chart. >> we have, saying of course,
since michelle was talking, it feels like this is a very headline driven market, we have lost part of the steam since, michelle has been on the air, we're at 126.24. we got to the session high in the last three minutes. >> i'm story, we interrupted your report. if you have more to tell us. >> this guy is one of the two leading contenders. he is anti-bailout. the things he said in his speech is the end of austerity in europe at. >> eddie: as we know it has begun. look at what happened in spain. he is telling the people of greece he they can do the same thing. he can get them to vote for him and then he will try to
renegotiate this bailout. so we'll see how it goes on sunday. >> michelle, thank you very much, again, if you're just joining us, a large rally just began in the last 10-15 minutes here on these words out of europe that maybe central banks are working on a coordinated effort to provide more liquidity for a bigger amount of money for bailouts for the european banks. we were up about 80 points on the dow, and then a 190 point gain. >> yes, it's the report coming. we're trying to get more on this. traders are trying to work out exactly what is going on and if this is more than just a report at this stage. we will take a break, stay tuned. lots to come, this final hour of trading very unpredictable and
welcome back, if you're just joining us, in just the last few minutes we had a dramatic rally here in the u.s. stock market. the dow jones rallying to a gain of almost 200 points from world out of europe that maybe the central banks there are prepared to give a coordinated program to provide liquidity to the banking system after the election on saturday. we have ed with us, rick, and brian. steve, it was as if the rumors you were discussing came true here and the market responded. how would it work for a
coordinated effort on the central banks. >> i just want people to be clear about what was said in the initial headline. central banks provide liquidity. when it comes to the united states federal reserve they have always been prepared to provide liquidity. when it comes to the u.s., i believe that statement is just a statement of fact or of the obvious that should not propel markets to any place. the question here is if the central bank is planning something specific when it comes to the post greek election and if there is disruption in the markets. the fed made it clear on the weekend or the friday before something was going to happen over the weekend, that it was prepared to provide liquidity. it would be the european central
bank that would be the source of something new that we have not seen yet, bill. >> steve, providing liquidity can mean a lot of different things. it could be the third low cost loans they provide. it could mean reviving the bond buying program that has been dormant for awhile. >> let's be clear, the european central bank had an unlimited quantities program at it's window. you're right, some form of new program -- >> obviously, guys, this is an assumption, stoking fears and the anti-bailout crew might win this election, and this is the only thing to boost the markets. if pro-bailout wins you have a situation some believe is unattainable. >> so does this change the strategy for you? a moment ago you were saying you're staying defensive for
things like you tillties, would you, on this news, take a more risk on strategy? >> not a chance in the world. we have welcome a world of leaders kicking the can down the road. maybe we need to change the economic books. instead of valuing stocks on earnings, maybe we should base it on how much a country is willing to print. we're prolonging what will happen. we will have to have austerity throughout the world. so stocks rallying doesn't change anything in my mind. >> i want to caution you on the source. it is a senior g 28 which sounds like a oxy mor yoxymoroon. central banks operate separately from the fiscal authority. if they're this is a fiscal
authority, i don't think that is a credible source on that issue. >> are you skeptical, rick san te tell -- santelli? >> the words down here is "if needed" traders down here laded and said is there any time they need to more? the story was just a headline, and as ed points out, ed you're going to be in the dog house because what you described is like prints to get equities higher, that's the cornerstone of the feds plan. >> g 20 officials are fiscal authorities, steve you're right. i think they don't want to get caught float footed on money. >> when have they achieved any
concrete anyway? >> this is the kind of person i would quote being a senior g 20 official, it would not be a central bank person. >> the market is losing steam right now. >> since steve gave his caveats we lost 40 points. >> we're losing some altitude here. we had a 200 point gain on the dow at one time turning this period, this cycle, now it's up 135 points. you well couldn't with more of a volatile whacky last hour of trading. >> we'll bring back our panel as well, and the euro has significantly lost steam along with stocks, very tightly correlated at this stage. to provide a better benefits package... oahhh! [ male announcer ] it made a big splash with the employees.
. just a half hour to go to the closing bell, let's get a quick check of the market. central banks are prepared for coordinated intervention following this weekend's general election. steve leisman is on the phone trying to get some details. the town is up 123 points but it was up nearly 200 points, but it is rising for the sixth time in eight sessions.
>> we have santelli, leisman on the phone right now, and brian shackman. maybe somebody is doing a little -- maybe ed is in there selling at this point? >> there was a fear with airlines keeping cash back that maybe this global growth slow down is real and will be prolonged and we were losing steam there. then we get headlines we pop up 200 and now we're only up 100 points. is it something we already knew, or is it just hedging some bets. >> rick santelli, what action are you seeing in your arena there? >> let's remember that spain was
downgraded about an hour or so ago. i saw the euro pop to 12635. and i sop the pound jump as well. a lot of people down here are also thinking pay very close attention to foreign exchange intervention as well. it's been in japan for weeks now because the imf is pushing them towards it. they're in recessionary mode. >> steve leisman, what more have you learned, steve? >> i contacted the ecb, they're telling me no comment on this. it has been pointed out to me thoo the european bank is
separate from the g 20. i just want to underscore the idea that it would be very strange for a g 20 official to speak for central banks. but it's not impossible, and if there are disruptions in the market that result from the greek elections, that the central banks would step forward. that's difference from the central bank stepping forward for quantitative easing. >> remember the political situation, the g 20 is meeting in mexico. they don't want to be caught flat footed. they're all sitting there saying we better look like we think we have policy going here and it's very easy to see -- >> you have to look like you
have a contingency plan. >> you can see how you can write this story very easy. i want to ask you quickly, if we got a coordinated intervention my central banks of major economies. you have it in asia, china, india in particular. so would this reverse anything or just be a short-term liquidity fix. >> look, i'm just trying to be very realistic. everybody watching knows there is a slow down around the world. at some point in time it will start to kbhakt the earnings of the companies in the united states. the majority drive most of them or a big percentage of the growth outside our borders. it's inevitable that we will see those expectations come down. the moves are wonderful, traders love them, but if you're a serious investor and a long-term
invest investor, be careful you will sea weakness in the market. that's the bottom line. >> got it, thank you all. >> thank you for your patience there. we'll be checking back with the rest of you. we love seeing the top of steve leisman's head there. let's look at the markets real quick. only just marginally in the nasdaq which as we know it did dip. we'll be right back.
no you're not imagining it, here we go again. it's usually this time of day when the stock market starts to move one way or the other. accelerating gains or losses, and as you have seen, volatility is back in full swing. the dow was up 170 points. now we're coming off the highs, and here is what volatility index has done in the last week
here. >> what is behind this is the question. let's bring in steve rosin. >> what do you think is behind the dramatic increase in volatility in the last half hour of trading we've seen latly? >> the higher inplied volatility goes, the higher it will go. the last hour is the highest. as that volatility goes higher as we have seen in the past few weeks, the last hour especially increases in volatility. no better way to sum up than today. and if investors and traders don't know, the g 20 doesn't know. >> you have the european trade on the open, and the u.s. open
itself -- i had the gang build a chart going back three days on the dow. there is a change in tone. one day it's up strong, the next day it's down strong. today we're up strong again. what do you think is the message right now? >> i think the message is that hyper a p hyper apprehensive. lately, really since the spring when you step back and look at the bigger pattern, the fix had been in a big bullish falling wedge and it broke in the strength right when the stock market in the spring, it has been going higher. if you look week by week and day by day, even 15 minute but 15
minute, the vix goes up, stocks go down, it's like the stock market is an inverse vix. >> i think we hit the highest for the year on june the 4th for the vix. is that a signal for the markets going forward? >> certainly. it's that uncertainly that really is buyers of protection. people are, i would say, cautiously pessimistic. overall, people are building bearish positions and that's driving the vix higher. >> thank you for your insights on another volatile hour here in the markets. we're going to the close here. we have 25 minutes to go and the dow is up 115 points. anything can happen.
the red and that's on some of the weakness we saw in some of the biggest names in tech today. look at some of these stocks. amazon, google trading low today, but we're in the positive now and seeing pockets of strength. biotech is one of those i want to show you. we have intermune, nektar. and a potential wid of 25.50 for quest software. remember dell was in talks for this one between 23 and 26 a share. those broke down, so 25.50 could be a good price for this stock. >> if you're just joining us, here is where we stand right now. the dow was up about 70 points at the top of the hour until
word came out that the central banks were working on a coordinated move to provide more liquidity should they be needed beginning on sunday and that's when we saw the market rs take off. >> yes, popping on that hope i guess. let's get reaction now and strategy with omar agular, and and stephanie links. let me get to you first omar. what would you do to take into account all of the things we've been talking about? >> what's clear to us is investors are looking for any sign of good news. anything that is support for a potential crisis. that will be extrapolated. we don't think that anything will be solved by the weekend, there will be uncertainly around it. >> anthony, what do you think?
encouraging or just an act of desperation. they have to balance the tight rope because they don't want to do too much and create a moshl hazard, but they don't want instability. >> steve leisman suggested this earlier on. was there ever any doubt that they would just sit by and not provide liquidity. >> of course, right, that's their role, right? let's see what happens with the fed next week. this is the market we're in though, unfortunately. we're in very volatile headline driven market. >> do any of you think there is more to do next week? >> i think the federal reserve has to maintain the status quo. >> keeping loan rates low which the market is doing anyway.
>> but let's not lose sight of the fact that we're seeing it go lower in the second quarter. >> we don't think there will be a change in the monetary quality. just a change in how they plan to see the growth. i said to you in the break, you must love the opportunities. >> you take your opportunities, and we have been putting cash to work in the last couple weeks, and on the red days that hurt, but buys on yield, buying quality, can having a balanced portfolio, and getting your opportunities on these wild swings. >> nearly everyone we speak to for a long time has been saying at least go for yield, but we have been seeing a lot of companies up their yields, target is upping it's dive dent by 20%. is there a feeling that there are a lot of companies doing
this to keep or attract new invest sors because they rab out of growth opportunities? >> companies have $2 trillion in cash equivalent in the u.s. corporates. the way we are in the cycle of earnings growth this is typical. companies will continue to increase dividends and do buy backs. we have to be careful though that some of those dividend paid securities are getting expensive. that's what we have to be careful for. >> thank you, we still have 17 minutes left in the trading day and anything is possible, right? we wanted to ask you all about word today of the house of representatives. what's that? okay. we're going to take a break. we'll come back with more "closing bell" after this. >> we have about 15 minutes and counting. ♪ rocky, rocky mountain high ♪ ♪ all my exes live in texas ♪
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getting more headlines out of europe. steve leisman, we're getting word of the bank of england is getting ready to take action for liquidity in their markets if needed. >> i'm sorry to show you the top of my head again, but i have this release here, the u.k. government, bank of england, to provide bank liquidity. for lending scheme for banks to leverage funds -- that would seem though confirm it. on the other hand there's more here that they might encounter credit tightness and volatility. it says borrowing higher for monetary easing is considered unlikely. it's what we're talking about but the idea that actions taken would be the counter typist if
markets seized up and banked would not laeend to each other. >> what's the trade on the back of this? can you hear us? >> i can hear you just barely. listen, you don't want to sell into this right now. we all remember what happened november 3rd of last year. talk about coordinated activity, the market took off and never looked back. this may be the news item we have been looking for to get out of that range. i think guys will look at this very closely. >> i've been noticing that gold has been extending gains on the back here with the these lines coming out of europe, what's your view on gold? >> people are still hooking to gold as something you have to keep in the portfolio, you can't get out at this level.
people are getting fearful of it, but the fact of the matter is we don't know exactly what's in front of us right here. we know that greece will not make any decisions trait away. we are not as aphrase of the election as we were earlier in the week. i know a lot of people will be sitting around on friday watching. and i think we'll be looking at it a little differently. i don't think gold is the same focus as later in the week. >> let me explain the applause. the general staff of the army will be ringing the bell as they celebrate their birthday today. so that, understandably, is the applause that's going on, but steve leisman, you could argue they were applauding the raleigh as well. some of the central banks are showing their hand right now. earlier we were able to attribute this to an unnamed g
20 source, but know apparently there is substance to it, yes? steve leisman? >> he is on the phone getting more information. if you're just joining us, this rally is about the word that the european central banks will be standing and ready to provide liquidity necessary in a coordinated effort should it be needed after the greek elections. it speaks to the desperation that our markets have for good news out of europe. >> it is, and that is the defining item on all radars right now. we have been through a lot in the last cupping years. there are things out there now we never would have suspected are leading the markets. now the coordinated activity
resolving some of the crisis. it's on a macro level in ways that i have not seen here before. >> thank you so much, we'll get back to steve shortly and find out what he's all about on the phone. at one point the dow was up 202 points, now it's up 168 but clearly off the highs of the day. we'll will back with nine minutes left in this very exciting trading day.
welcome wac, six minutes left in the trading session. we were planning to talk about volatility anyway today, but i think this one tops all expectations of what we were looking for today. >> i think they were doing it on purpose. look at this fantastic behind us, of course the army celebrating it's 237th birthday. we'll get to the closing bell, i wanted to point out the fantastic costumes walking by. >> we have omar aguilera here.
i know you're all about helping people navigate this volatility, what do you say? >> stay calm, don't get overly emotional. investors have got the companies backs since the beginning of the year. we're still battling that. there's still strong u.s. fundamentals. it still represents the cleanest. >> matt, is this a fear rally? or how do you characterize this when you get the kind of pop we had at the top of the hour here when word got out of a coordinated frefrt the central banks of injury? >> it's got to be fear and fear along. 100 point rally on that news we expect that. there is nothing else they can do on this situation. i like to see the rally into the weekend here. we have a lot of pageantry
today. no mistake about it. >> where do you think the market is factoring in? what is it assuming? >> it used to be the bernanke put, now it's the europe central bank put. markets go up, probailout wins, we'll go up, i love this new trading. >> was there ever any doubt the central bangers were not there to backstop the worst case scenario. >> they had way too much invested to not step in they they need to. i don't think they will need to. central banks are prebailed out. >> how do you make men then? >> with volatility. as a long-term investor you have
to be more casuutious, but for trader it's beautiful for us. >> they sold the daylights out of the market in april and may. energy stocks are down 25%. there is a lot of risk taken on the table. the portfolio is easier to manage. it's like a coiled spring. >> i'm going to duck out. we have about three minutes to go here, dividend plays, is that what people want to do to try and smooth out of rough waters? >> absolutely, we're telling investors to make sure they balance the safety of players like quality companies that pay dividends and make sure they look for growth and company that's can look at capital expenditures. it's hard to concentrate on the long term view and the focus on europe and everything this week. >> we had treasury auctions this week, the ten year and 30 year
at record lows in many cases on this, and it's very tur for people trying to save and live on income right now. >> that's the ultimate question. i think when you look at the real waits, and the risk premium, it is a place you have high dividends and high income inequality. we need to warn people we my have more volatility tomorrow because we have another exper ration coming tomorrow, don't we? >> absolutely but it's a great time to sell into that liquidity. so if you're afraid and want to take off risk, tomorrow is the day to do it. no excuses monday if you didn't get out. >> so you're saying you don't want to be long going into the weekend just in case. >> why not if you can trade it intraday, no reason to take the
risk on a friday before a weekend like this. >> global central banker put. >> it's the quarterly exper ration tomorrow of stock and index futures. they will expire at the open tomorrow. you will get a little volume around that, but it's a problem because they're expiring and you will not have protection over the weekend. a lot of options activity now about how to protection yourself on monday. people are going to the options at the end of the month. >> it's pretty complicated, but tell us what net effect is more markets as we go into the weekend which is complicated by the events in europe. >> there's a time to sell liquidi liquidity. they will be adding in the evening too. you'll have it in the morning and the afternoon and in